Asia middle distillates - Key market indicators this week

Singapore — The Asian middle distillates market started the week of Dec. 21 on a stable note, with gasoil and jet fuel/kerosene largely rangebound amid a seasonal lull ahead of year-end festivities.

The jet fuel/kerosene complex moved in a tight range as the strong seasonal demand for kerosene was offset by bearishness on the aviation front. Meanwhile, on the gasoil front, demand uncertainties arising from the pandemic continued to be matched by curtailed production from refineries, with the tighter supply coming even as some pockets of demand remain.

Front month February ICE Brent crude futures fell 95 cents/b to $50.45/b at 0300 GMT Dec. 21 from the 0830 GMT Asian close on Dec. 18.

JET FUEL/KEROSENE

** The jet fuel/kerosene market was relatively stable mid-morning Dec. 21 as market participants stood on the sidelines, awaiting fresh pricing cues. Brokers pegged the front month January-February jet fuel/kerosene timespread at minus 25 cents/b at 0300 GMT, widening 3 cents/b from the 0830 GMT Asian close on Dec. 18.

** The FOB Singapore jet fuel/kerosene cash differential saw some improvement in the week amid strong kerosene demand on colder winter temperatures, and was assessed at minus 15 cents/b to the Mean of Platts Singapore jet fuel/kerosene assessments on Dec. 18, narrowing 10 cents/b week on week, Platts data showed.

** The UN World Tourism Organization reported on Dec. 17 that the global tourism industry is likely to record its worst year of travel in 2020. The agency also expects to close the year with international arrivals declining by 70% to 75% for the whole of 2020, bringing global tourism back to levels not seen since 1990.

** On Dec. 18, Singapore Airlines Group reported it will add flights to four added locations -- Dubai, Tokyo-Haneda, Moscow and Munich -- and increase the frequency of existing services to points in the United States, Europe and South Africa in January 2021.

** The Q1/Q2 jet fuel/kerosene swap spread -- an indication of near-term sentiment -- averaged minus 37 cents/b for the week ended Dec. 18, up from the prior week's average of minus 47 cents/b.

GASOIL

** The January-February gasoil market structure stood at minus 10 cents/b at 0300 GMT, narrowing from minus 12 cents/b at the Asian close on Dec. 18, Platts data showed.

** The January Exchange of Futures for Swaps spread was pegged at minus 25 cents/mt at 0300 GMT, narrowing from minus 99 cents/mt at the Dec. 18 close.

** Asian gasoil sources said the middle distillate may move within a narrow range this week on the back of year-end festivities, which will see many participants away from their desks. Fundamentals are seen broadly steady, with some demand supporting overall market sentiment.

** In the Middle East, traders said fresh requirement from South Africa -- due to ongoing domestic refinery outages -- continue to bolster the gasoil market. Market sources said late Dec. 18 that South Africa's PetroSA issued a tender seeking a total of 93,000 mt of 50 ppm sulfur gasoil for January delivery into Cape Town and Mossel Bay.

** Reflecting the sentiment, the Q1-Q2 quarterly gasoil swap spread -- an indication of near-term sentiment -- averaged minus 37 cents/b for the week ended Dec. 18, up from the prior week's average of minus 47 cents/b.